Frank Hecker

Seven answers: Liberty, equality, and baseball

17 minute read

Distribution of the 2015 “on-base plus slugging” (OPS)
values for Major League Baseball position players with 130 or more
at-bats. (Click for higher-resolution version.) The dashed line shows
the average OPS for all such players.

tl;dr: How America’s pastime illustrates the tensions and trade-offs
between liberty and equality.

In this post in my series outlining my answers to the “Seven
Questions” posed by Jason Booms, I address Jason’s fourth question:

Thinking about the principles of liberty and equality, and this can
apply to any given challenge (fiscal, social, etc…), how can they
both be promoted to ensure that the “unalienable rights” of all
Americans are protected?

What does it mean to be “free” or “at liberty”? What does it mean to
be ”equal”?

Suppose someone tells you, “When I retire next year I’ll be free to
travel the world.” In what senses are they using the word “free”? The
most basic sense is that they are free from coercion: no one,
including the government, is going to physically stop them from
leaving the country and visiting others.

The next sense is liberty as individualism: they are not bound by
social and familial obligations or restrictions that might otherwise
keep them at home. They can live their life as they choose.

A third (but not necessarily final) sense is liberty as “capability”:
they are healthy enough to travel, any disabilities they might have
can be accomodated, and they have money to pay their way.

What about equality? One sense would consider us all equal in our
in-born potential: that each of us could accomplish anything given
sufficient will, opportunity, and support. We could be equal in a
political sense, as in the preamble to the Declaration of
Independence. We could be morally equal in the sight of God, as the
apostle Paul wrote in Galatians 3:28. Finally, we could be equal in
the rewards that accrue to us in our life and work.

My primary concern here is with freedom as capability, with the first
and last senses of equality—to what extent are we equal in our
abilities, and to what extent should we receive equal rewards—and
how those connect with our political equality. To make the discussion
more concrete, let’s talk about baseball.

One way in which we are not all created equal

Major League Baseball players are a rare breed: they’ve proven their
ability to play in the major leagues and have the benefit of all the
training and other support that their well-financed teams can
provide. From a naïve point of view we’d therefore expect them all to
demonstrate equal skills and ability.

This is not the case. As shown in the graph above, when measured by
one common baseball statistic, the ability to get on base and hit for
extra bases, Major League Baseball players show a wide range of
performance, with the best players achieving at a level better than
twice that of the worst.

More specifically the players’ performance roughly follows a so-called
Gaussian distribution, with most players performing at an average or
near-average level, some players performing significantly better than
average, and some players performing significantly worse.

Gaussian distributions tend to arise when there are many factors
influencing a certain measure, with each factor having a relatively
small effect and being relatively independent of other factors. For
example, when it comes to the ability to get on base and hit for power
we can look to factors such as excellent eyesight, quick reaction
time, good “hitting mechanics”, and so on.

Many other measures of personal characteristics follow a Gaussian
distribution, including measures that are economically important. Thus
we’d expect that people in general would differ in their ability to
exercise the many competencies that various employers value: some
would do a great job, some a poor job, and most a mediocre one.

It’s unlikely that a typical sandlot ballplayer could become a major
league player, even given every opportunity and assistance
possible. Similarly it’s unlikely that any given person could perform
at a high level in every possible job, even if they were intensively
trained from early childhood. Discussion of balancing liberty and
equality must start with that fundamental premise.

Distribution of the 2016 salaries of the Major League
Baseball players whose 2015 OPS statistics are shown in the previous
graph. (Click for higher-resolution version.) The dashed line shows
the average salary for all such players, the dotted line the median
salary.

How liberty magnifies inequalities

Back to baseball. We’ve seen that players’ abilities span a fairly
wide range even in the major leagues, and in at least this case seem
to be distributed in an approximately-Gaussian manner. We’d
therefore naïvely expect that how much players were paid would follow
a similar pattern, with most receiving an average salary, some
significantly higher salaries, and some significantly lower salaries.

Again, this is not the case. Instead the distribution of salaries more
closely resembles a Pareto distribution or “80-20” rule: most players
have relatively low salaries and a few players have relatively high
salaries. Looking at the same group of players as in the first graph,
there is more than a 2-to-1 difference in performance as measured by
OPS, but more than a 50-to-1 difference in pay. Why should this be so?

An important reason is that players are ultimately judged on helping
their team win, and a relatively small edge in performance can result
in a team winning rather than losing. These relatively small
differences in performance will then be magnified into relatively
large differences in compensation, resulting in a small group of
highly-paid superstars separated by a relatively wide gulf from the
mass of journeyman players.

The economist Robert Frank referred to this as the “winner-take-all”
effect, “the result … of the spread of markets in which the value of
production depends primarily on the efforts of only a handful of top
players who are paid accordingly.”

Winner-take-all dynamics arise relatively easily in economies in which
free trade and global communications allow companies to serve a larger
market, thus increasing the returns from hiring top talents, and in
which top talents are in turn free to move from firm to firm in
pursuit of higher compensation. Thus increased (economic) freedom
leads to increased (economic) inequality, above and beyond what we
might expect simply from the distribution of peoples’ abilities and
performance.

Distribution of the number of major league seasons played
by all players whose careers fell within the period from 1901 through
2010. (Click for higher-resolution version.) The dashed line shows the
average number of seasons played, the dotted line the median number of
seasons.

Inequality and the uncertainties of life

The disparity between journeymen players and superstars, wide as it
is, is but one aspect of inequality in Major League Baseball. Further
inequality arises because players have major league careers of
different lengths, with many players’ careers cut short due to
injuries, age-related declines in skills, or simply being marginal
players more susceptible to being released.

As shown in the graph above, most players have relatively short
careers. Given two players of equivalent skills, the player with the
longer career will have greater lifetime earnings, especially if they
play long enough to become free agents and enter into more lucrative
contracts.

The minimum salary in Major League Baseball is quite high compared
that of the typical employee. However, if a player spends only a short
time in the major leagues and then has limited employment prospects
after leaving baseball, their lifetime earnings may be no greater than
those of a middle-class worker with a steady job and a good salary.

Of course, the traditional “steady job with a good salary” can be hard
to find nowadays for many if not most people, with wages for many
people stagnant and part-time or contingent employment increasingly
common even for people who’d like to work full-time.

Just as in baseball, this dynamic further increases inequality,
particularly wealth inequality: people who make less or have
unexpected expenses (e.g., due to ill health) are less able to save
and have less opportunity to acquire assets such as a house, stocks,
or bonds that can provide compounding of wealth over time.

2016 salaries vs. 2015 OPS for Major League Baseball
position players with 130 or more at-bats in 2015. (Click for
higher-resolution version.) The line shows the result of doing a
linear regression of 2016 salary on 2015 OPS, with variation of OPS
explaining very little of the variation in salary.

The politics of liberty and equality

Thus in baseball as in life, individual differences in ability and
performance are magnified into large differences in compensation, and
these in turn combine with the random events of life to cause even
large differences in overall wealth. But someone might reply, “Is this
really a problem? And if it is, can we solve it without unduly
restricting peoples’ liberty?”

For example, one argument is that peoples’ compensation is merely a
reflection of the added value they provide to those who pay them,
their so-called “marginal product”. Such compensation is therefore
deserved, and to interfere in compensation arrangements erodes the
incentives provided by a free market.

If this were the case then we should see salaries in baseball track
reasonably closely with statistics that attempt to measure a player’s
value to a team. But this is not necessarily the case: as shown in the
graph above, a player’s salary is only loosely related to the
particular measure of performance that is OPS.

Long-term contracts account for part of this, since they uncouple
present pay from immediate past performance to some extent. It’s also
possible to use more sophisticated measures of baseball performance to
determine compensation, for example “wins above replacement” or
WAR. Yet arguments still rage over whether some players are
significantly undercompensated relative to their performance, and
others significantly overcompensated.

The situation is even worse outside baseball, where in a large firm it
is often not clear at all how much value a particular employee is
adding to the firm’s bottom line, especially for general corporate
support functions. This makes it difficult to judge whether any
particular person “deserves” what they are paid.

A related argument is that as long as compensation is the result of
voluntary agreements freely entered into, any attempt to change the
resulting distribution of income and wealth is an unwarranted
restriction on liberty.

But is baseball compensation really the result of an unrestricted
market free of any political considerations? The short answer is no.
First, Major League Baseball is the unique beneficiary of an exemption
from U.S. antitrust law that allows MLB team owners to collude in ways
that would be considered illegal restraint of trade in other
industries. Second, not-so-uniquely Major League Baseball players are
organized into a union, an activity permitted and protected by
relevant labor laws and overseen by the Federal government.

Thus salaries are not based purely on free-market considerations but
rather are in large part the result of negotiations between team
owners and players considered collectively. This is a struggle into
which questions of fairness and justice almost inevitably intrude,
which is subject to government interference on behalf of either side,
and thus which can be characterized as political as well as economic.

This is true in the wider economy as well: the economic rewards that
each person receives are a function not just of their talents but of
the political, social, and economic system in which people exercise
those talents. The entire system can then be judged on well it
performs for those who participate in it.

Pursuing democratic equality

Where does that leave us? First, it’s clear that the freedom that
people enjoy has increased greatly compared to the past, even if many
still do not enjoy it to the same degree as others: Liberal
democracies have greatly lessened the burden of government coercion;
evolving social mores mean people are less subject to social
strictures; and science, technology, and the free market have made
necessities of life like food, clothes, and transportation more
affordable—while making it easier than ever to satisfy what we
desire beyond the bare necessities.

At the same time it’s also clear that an inherently unequal
distribution of talents and other non-monetary assets is further
magnified by the free-market system. This in turn lessens the extent
to which many enjoy freedom in the sense of capability, even though
economic freedom and individualism may be greater than ever before.

Given that, what (if anything) should we do about it? And how should
we justify any policies we adopt? I’ll address the latter question
first, since the justifications for addressing inequalities help
determine the means by which we might do so.

This question is often reduced to a binary opposition between ensuring
equality of opportunity vs. equality of outcome. This is both
simplistic and unrealistic. Ensuring equality of opportunity is
certainly consistent with promoting freedom as noncoercion and freedom
as individualism. However given inequalities of talent and the
dynamics of a free market system in magnifying those inequalities, it
cannot in and of itself promote freedom as capability.

On the other hand, ensuring true equality of outcomes is difficult to
impossible. Even in a system not organized around free markets natural
differences in talent and other personal characteristics would lead to
inequalities in outcomes, inequalities that history shows us could be
rectified only at the expense of severely limiting freedom.

That might seem to leave only a practical justification for reducing
inequalities, such as that recently offered by Samuel Hammond and
others: that providing a generous system of social insurance is the
best way to bolster support for the free market and stave off the
growth of anti-market populism. This seems plausible, but as a
justification it has a “bread and circuses” flavor to it, implying as
it does that equality matters only as a way of promoting political
peace.

I prefer philosopher Elizabeth Anderson’s conception of what she calls
“democratic equality”, which focuses on freedom from domination and
our relationship to our fellow citizens: that “people are entitled to
whatever capabilities are necessary to enable them to avoid or escape
entanglements in oppressive social relationships … and to the
capabilities necessary for functioning as an equal citizen in a
democratic state.”

People can meet each other in equality as fellow fans of a team,
whether they sit in the luxury boxes or in the cheap seats (or watch
from home). The ideal of democratic equality is for people to be able
to similarly meet each other in equality as fellow citizens, even if
their personal circumstances are very different. What must happen for
them to be able to do this?

First, it helps if there exist opportunities for everyone to be a
productive member of society and to seek excellence in their own way.
This is one of the benefits of a free-market economy: that
entrepreneurial innovation can create not just new jobs, but different
kinds of jobs. Had basketball not been invented and baseball been the
only professional sport, we might know Michael Jordan (if we knew him
at all) only as a better-than-average minor league player. Similarly a
dynamic free-market economy provides spaces for all sorts of talents,
especially when it helps support a vibrant civil society.

Second, there must be a level of subsistence below which people cannot
fall, and as much as possible a minimum return for the work they
perform. Baseball’s minimum salary for new players means that everyone
who advances to the major leagues starts out in roughly the same
position, and ensures that the intense competition between players
eager to join an MLB team does not leave them vulnerable to owners
eager to squeeze payrolls as much as possible. Minimum wages in other
contexts, as well as related schemes like wage subsidization, can
function similarly, providing benefits for workers sufficient to
compensate for the downsides (e.g., higher prices to others).

Third, people should be buffered to some extent from the unforeseeable
events of life. Long-term contracts in baseball not only allow team
owners to retain stars and likely stars, they also provide players a
reasonably guaranteed return on their work regardless of what might
happen in the future. Similarly schemes like government-provided
universal catastrophic coverage can help ensure that people and their
families do not suffer financial ruination due to ill health, but can
instead plan for the future knowing that their health care costs will
never exceed an undue percentage of their income.

The support given to people in support of democratic equality is to
enable them to participate in democratic life with others. It should
therefore be provided to everyone as a matter of course, like Social
Security or Medicare, and not be means-tested. This avoids singling
out some among us as the objects of our charity and pity—and thereby
risking their in turn becoming the objects of resentment.

It’s also desirable that such programs be funded at least in part by
sources that are in some sense “owned” by all of us or stand apart
from us. One example at the state level is the Alaska Permanent Fund,
which issues “dividends” to Alaskans based on their perceived common
interest in the state’s oil resources. Similar assets at the national
level include rights to public lands or portions of the
electromagnetic spectrum auctioned off to telecommunications companies
for their use. This again helps avoid characterization of social
insurance programs as simply forced redistribution from “makers” to
“takers”.

In this vein, recall that the idea of democratic equality involves
making it possible for us to stand before each other equally as fellow
citizens. But pursuing democratic equality for all citizens does not
necessarily require pursuing it for anyone else. It’s not unreasonable
for Americans to believe that they owe more to those who are their
fellow citizens than to those who are not.

We can and should welcome those who want to become Americans, but at
the same time we can justify withholding the full benefits of being a
citizen until they complete their own paths to citizenship. Until that
time the taxes they pay could be dedicated to help fund universal
social insurance schemes for those who are already citizens.

Suppose that we agree that achieving the democratic equality of all
American citizens is a worthy goal. Suppose also that we have some
idea of what measures might best promote this. What’s stopping us from
implementing them? The problem is that these measures require that we
take collective action via government, and the ongoing influence of
individualism and group identity politics (of all flavors) have
impacted our ability to take such actions.

As I write in my next post, this deficit of collective will may
continue for the foreseeable future. But there may come a time when we
can adapt the words of Paul to our contemporary situation, and say
that as citizens there is no longer white or black, there is no longer
rich or poor, there is no longer red state or blue state, for all of
us are equal as Americans.

Further exploration

The following provide additional background for and expansions of the
topics discussed in this post:

“What is the point of equality?” (ungated version
[PDF]) by Elizabeth Anderson criticizes “luck egalitarianism” and
lays out her alternative vision of “democratic equality”. (See in
particular pages 316-321 and the conclusion on pages 336-337.)